Changes in the Construction Industry Open Door to New Litigation


The construction industry is always changing as technological innovations improve contractors’ processes. The evolving nature of the construction business will impact the legal picture for industry stakeholders. The number of lawsuits may drop, but that is not expected, and the types of lawsuits may shift away from traditional construction disputes. When adopting new technologies, companies need to consider the legal ramifications along with all of the other factors that may impact the adoption of various technologies.

The construction industry as a whole is moving from manual inputs towards becoming more of a high-tech venture. Contractors are turning more towards automated project management to improve how they work. This should better assist them to stay on schedule and reduce the possibility of construction defects. These new technologies should result in better processes and more efficient work.

In the future, construction is likely to become a more centralized enterprise. Instead of running and overseeing jobs from each decentralized project site, technology will help plan and guide the project from a remote site. From that central site, contractors can send various pieces of the work to places far from the job site. Contractors will invest more in technology to streamline operations and to work smarter. It will be beneficial for both their bottom line and their customers.

Construction Industry Lawsuits Will Become More Complex

The shift toward technology will change the nature of construction lawsuits. Currently, many disputes revolve around issues at specific worksites. Most often, contractors end up in disputes with customers or subcontractors over the timing and quality of work issues. The hope is that improved technological processes can reduce the overall number of disputes. Contractors can take advantage of innovation to better manage projects.

When some production and work is shifted offsite, contractors are able to maintain a more controlled environment. They are less subject to site conditions, including climate and weather. Builders can cut costs and reduce some of their legal risks, albeit by adding additional intricacies to the project.

However, this may result in different types of lawsuits or claims, possibly causing such to become more complex in the process. Since contractors will be relying on technology providers more frequently in managing their projects, there is the possibility that something may be wrong with the actual system. If key software does not work as intended, it could affect multiple projects, throwing the contractor’s entire business off balance. Then, the contractor would need to sue the company responsible for the technology. If the customer sues the contractor for delays or defects, the contractor may seek compensation or indemnification from the technology provider.

Contractors May Deal with Lawsuits in Unanticipated Areas

With a move towards technology, industry participants may become involved in more disputes over intellectual property. Current construction contracts may not account for intellectual property. However, when there is more technology involved, there is more technology to protect. If contractors are using sophisticated technology, they may want to negotiate provisions to protect their intellectual property. Similarly, their contracts with technology providers may also require steps to protect the intellectual property used by the software.

In a similar regard, the use of technology will result in the production of far more data in the course of a construction project. Contractors and customers will need to agree ahead of time how that data is to be handled and who owns it. The proliferation of data may also invoke privacy concerns that contractors will need to account for during the project.

In addition to technological improvement, the products the industry uses are becoming more standardized. Although that helps reduce some of the variance associated with construction projects, it also leaves contractors and their customers vulnerable when something goes wrong with one of the parts. Product recalls are rare in the construction industry, but they are becoming far more serious when they do occur. One can expect more large-scale product liability lawsuits against suppliers.

In general, more construction work will be done off-site. Inputs will be produced away from the construction project, and contractors may have some flexibility to do work where labor is cheaper. However, it also means they need to track more laws and regulations because work may be done overseas. Not only does this invoke international law issues, but it also means there could be bumps when working in and exchanging foreign currencies. In addition, if something goes wrong in off-site production, it can and often will affect more than one project. Contractors should be prepared to work with additional attorneys who have experience successfully handling these kinds of legal issues, including international law issues.

Finally, stricter carbon reduction standards may lead to lawsuits based on the failure to meet required targets. Contractors could also face claims for using more energy than allowed on a product or failing to meet certain new building standards. As a result, industry participants need to become familiar and remain up to date with environmental regulations affecting their projects.

Thinking Ahead Can Help Reduce Legal Risks

All of this means construction industry stakeholders will need to work with forward-thinking legal counsel who can anticipate future issues impacting the industry. Contractors will need to consider how their business may evolve when drafting agreements and planning their future needs. In addition, they should understand that litigation could be more complicated, requiring them to plan ahead and work proactively. By all means, companies should avail themselves of new technology to save time and do better work. However, they should also anticipate how their business will change and adjust accordingly.